Hartmarx senior lender, Wells Fargo's Wachovia subsidiary, has been pushing for liquidation as the highest recovery approach. Despite this being a small, anything but strategic business (other than to the President's outward appearance), the political pressure surrounding it has been unusually pitched. Wells finally capitulated after the new buyers begrudging through a few more million dollars Wells Fargo's way, though Wells is still losing 28 cents on the dollar.
Here's some pertinent coverage from Dow Jones:
Judge Bruce W. Black of the U.S. Bankruptcy Court in Chicago signed off on the transaction at a hearing Thursday, solidifying the results of a Wednesday auction at which Emerisque and SKNL had emerged victorious. The pair had served as the lead bidder, offering $128.4 million in exchange for the assets of Hartmarx.
"Consummation of the sale of the acquired assets at this time is in the best interests of the debtors, their creditors, their estates and other parties in interest," Black said in court papers filed Thursday. [emphasis added]
In the days leading up to the company's bid-procedure hearing, where it sought approval for the rules governing its auction, Wachovia Capital Finance Corp. filed a formal objection to Hartmarx's stalking-horse pick. The bank said Emerisque's bid, then valued at $119 million, was unacceptable, as it would leave the lenders $50 million short of full repayment.
Last-minute weekend negotiations before the hearing yielded a higher bid - $128.4 million - and support from the lenders. Details released at the time indicated that the majority of the new bid - an $83.964 million payment representing 72% of the balance on Hartmarx's bankruptcy loan as of May 8, and a $5.5 million junior subordinated secured note - would go directly to Wachovia. Emerisque and SKNL also were set to assume liabilities estimated to be worth more than $33.5 million.
Hartmarx's workers [i.e., the "other parties in interest" referred to by Judge Black] had vigorously thrown their support behind Emerisque and SKNL's bid and denounced creditor Wells Fargo's push for liquidation as hypocritical, considering the bank had received taxpayer funds under the Troubled Asset Relief Program. Some national and local politicians also threw their voices into the mix, with lawmakers like U.S. Sen. Charles Schumer leading rallies alongside workers at various Hartmarx plants.
[HT: Pitchbook PE and CM]